NCR Banks on Atlanta Talent for FinTech Innovation

NCR Fintech in Atlanta

It may be a 130-year-old company, but you can forgive NCR if it doesn’t act its age.

The Fortune 500 mainstay, a self-described “global leader in consumer transaction technology,” has been making major investments in new tech trends trumpeted by younger, hungrier startups such as mobile payments systems and cloud-based ATM support. Earlier this month, NCR announced a partnership with Invenco that will give fuel pumps at certain convenience stores and gas stations a 21st-century makeover in 2017, complete with large touch-screens and contactless payment options.

It’s that kind of innovation that NCR is embracing thanks to a strategic shift towards software and cloud-based services. It also hopes to take better advantage of Atlanta’s engineering talent pool, which is a big reason behind the November groundbreaking of NCR’s new $300 million headquarters near Midtown’s Tech Square.

“We have about 10,000 engineers graduating every year,” NCR Senior Vice President Andy Heyman told Hypepotamus, “and about half of them are leaving. That’s a shame. I think that tide is about to turn, and I think we’re one of the leaders in making sure that occurs, and great technology will follow from that.”

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In this Q-and-A, Heyman talks about Atlanta’s place in the financial technology industry, a recent merger involving two competing companies, and what to expect regarding NCR mobile payment products and business services over the next five years:

Let’s start with the news from last November that a large investment/advisory firm, Blackstone, was investing $850 million in NCR. That transaction successfully completed in early December. How will that money be used?

Blackstone, which is one of the preeminent private equity firms out there, made a statement that they want to partner with us on our transformation (to software and cloud services). It’s incredible that a company like Blackstone, with their prestige, says it wants to be by your side for the long haul.

They bring so much value to us in several areas. First, they have an expertise that is beyond reproach. Second, they have global experience that matches what our vision is and where a lot of our portfolios are. We only do 40 percent of business in the U.S. The other 60 percent is spread throughout the rest of the world. Third, in terms of the supply chain, they have tremendous capabilities in terms of manufacturing plans, operations, supplier arrangements. The final thing they bring to the table is human capital. They have a network out there and as we’re going through our transformation, it’s very important that it’s people-driven. Those connections can help us.

That does send a powerful message about NCR going forward. But you’re now facing a new global competitor after the 2015 merger of Diebold and Wincor. The three major players in this space are now just two, and one of them just got a lot bigger. Won’t that present a tough choice for banks and retailers that you would sell to?

From a company-size perspective, Diebold plus Wincor is still a smaller company than NCR. If you look at financial services, Diebold and Wincor are bigger than NCR – $4 billion in sales for Diebold/Wincor, about $3-3.4 billion for NCR, so that’s one metric in terms of size.

In terms of financial services, mostly in the ATM space which is where Diebold and Wincor have traditionally played, they become the biggest ATM company in the world. However, we saw 5-6 years ago that the financial services industry is going through its own transformation. Retail banks don’t look like they used to. There’s a huge transformation going on in how they’re trying to provide services to customers, in very much a digital and physical, combined omnichannel way. When we looked at that, we started making bets and investments five years ago to transform our business.

While the revenue of the combined entity is larger – 20 percent larger than NCR – their profits are less than half of NCR’s financial services business because of that transformation. We’re selling a lot more software, a lot more cloud-based capability, a lot more branch transformation technology than those two combined. So we’ve gone through a lot of the transformation that now they’re going to start to go through after they integrate their businesses. So when customers are talking to us, they’re looking at us as a stronger outfit than ever because we’ve already gone through that.

What kinds of new products and services can we expect as NCR continues its shift away from traditional transaction hardware and services?

IntTeller_SelfServ32_241We have a couple of examples that are showing growth right now.  We just launched a business banking application. When a community bank is servicing their population, typically that retail bank is going to make 20 to 50 percent of their profits on small business customers. The functionality from a technology provider targeting small business customers for the bank – there’s really a void in the market now and we’ve launched that. It’s showing tremendous pipeline growth for us right now.

We’ve done the same thing for the first ever cloud-based ATM offering that’s showing tremendous progress for us. We’ve already closed a lot of contracts for this. Same thing in the retail business with our commerce hub for industries. We have a similar type of connection capability for the hospitality and restaurant industry where third party applications like Open Table are plugging into our commerce hub so we can grow the ecosystem and add more sales to our company as we add value to these industries.

Where do mobile payments fit into NCR’s strategic goals?

I would broaden that to money movement in general. There’s a tremendous amount of innovation here. Georgia is actually one of the great hubs of the world around how money is moving. It’s a real growth industry for Georgia and we’re excited about that.

Specific to NCR, we have 10,000 customers for an application that you can download from the iTunes store, load it on a phone or tablet or a custom-built device from NCR and you can start to handle any transaction with any type of consumer that small businesses can provide services to. We have payments partnerships and just launched a really good one with First Data. We also have one with Worldpay that’s specific to the restaurant industry and another specific to specialty retail. It’s more about servicing businesses rather than directly to the consumer, which is more what Square is doing.

We have a partnership with Apple in terms of being able to recognize an iPhone transaction. We are the first ever in terms of being able to have contactless capability at an ATM. We launched that in Australia this year. We’re doing the same thing with point-of-sale as our customers adopt that capability.